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How to adapt your risk management strategies to navigate cargo risk and supply chain disruption in an uncertain trade environment

As the world goes through increased uncertainty triggered primarily from higher inflation, economic slowdown and geopolitical conflicts, one of the most affected segments is shipping. Cargo shippers — including freight forwarders — are confronted by a complex matrix of operational and financial risks including port congestion, rerouted trade lanes, longer voyage durations, and shifting supplier networks.
 

Recently, war risk insurance rates for vessels in the Red Sea and Arabian Gulf have seen an uptick from 0.3% to up to 1% of hull value1. For a standard cargo vessel with a hull value worth $100 million, this could mean an additional $1 million per trip. Furthermore, quotes from War Lead Underwriters are also now valid for just 24 hours, down from the previous 48 hours2.  
 

This evolving landscape is expected to bring greater volatility, as trade policies shift burdens across markets while favouring regional trade partnerships. The shift is accelerating diversification strategies and redrawing global supply chain maps.

Why are trade uncertainties a mounting challenge for cargo owners and freight forwarders in Asia?

Cargo owners:

  1. Asian exporters adopt cautious approach amid port congestion, shipping delays impacting global trade routes
    Asian exporters are adopting a cautious “wait and see” approach that often results in prolonged storage and operational delays. Port congestion, already worsened by Red Sea-related security issues, continues to stretch voyage durations. Compounded by high landed costs and delays in customs clearance, many exporters are now reassessing their global trade routes and sourcing patterns.

  2. Cross-border manufacturers face rising costs and supply chain challenges
    With goods sourced, assembled, and processed in multiple countries, changing trade policies can impact costs at several stages of the supply chain for manufacturers operating across borders. This ripple effect drives up production costs and complicates pricing strategies. Many firms are now engaging customs consulting and compliance experts to restructure sales pricing and mitigate levy-related expenses.

Freight forwarders:

  • Rising storage costs and full-value contracts reshape commercial relationships
    The trade policy changes impact cost allocation, create delay penalties, add compliance burdens, and lead to earlier renegotiations of freight service agreements. In response, forwarders are ramping up their advisory roles offering impact analyses, compliance reviews, and “supply chain engineering” to help cargo owners navigate the shifting landscape.

Read more: Port congestion and extreme weather: The impact of shipping delays on the marine market

Risk management solutions for cargo risk and supply chain disruption

Insurance strategies:

  • Re-examine policy limits, warehouse storage terms and valuation methods.
  • Extend coverage for temporary storage through cargo policies or a stock throughput programme.
  • Verify that logistics operators’ liability insurance includes errors and omissions coverage.

Supply chain network modelling:

  • Model real-time trade disruption scenarios.
  • Gain visibility into supply chain routes and supplier tiers.
  • Assess potential monetary exposures to better inform risk strategies.

To navigate these complexities, Marsh offers access to Sentrisk, a proprietary platform that delivers detailed insights into current levies and visualises supplier dependencies across your entire value chain.
 

It enables scenario modelling and financial stress testing to identify potential disruptions and assess their impact. Leveraging this intelligence empowers you to optimise supply routes, evaluate alternative suppliers, and negotiate more favourable terms. With real-time monitoring, your business can make timely strategic decisions to enhance resilience, maintain profitability, and stay ahead of evolving risks.
 

Explore more: 3 ways AI can enhance supply chain visibility against tariff exposures

Why Marsh

Marsh works with leading cargo shippers, freight forwarders and logistics providers across Asia to manage complex risks in today’s volatile trade environment. Backed by our proprietary AI-powered platform, Sentrisk, and deep marine, cargo and logistics expertise, we help businesses in Asia assess risk exposure to levies, optimise insurance strategies, improve supply chain resilience and safeguard business continuity. Our proven track record includes launching innovative solutions like Trade Disruption Insurance and War and Strikes Risk to address evolving cargo risk.

Connect with Marsh to assess your risk exposure to levies and optimise your risk management strategies today.

Please note that Marsh PB Co., Ltd and Marsh McLennan are not engaged by nor involved in any manner with Bonus Ranch and its promotion, and has not placed any insurance for nor insured any of its businesses or operations. Marsh as a licensed insurance broker will not request customers to make payment via non-standard methods, such as the transfer of money to any individual’s bank account.